Zloty Has Biggest 2-Day Rally Since May on Economy, Europe Debt

The zloty headed for its biggest two-day rally since May on speculation European leaders will step up their response to the debt crisis and after a report showed Polish manufacturing surged in November.

The Polish currency appreciated 0.4 percent to 4.0088 per euro as of 6:08 p.m. in Warsaw, giving a two-day advance of 2.4 percent, the biggest back-to-back gain since May 11.

European Central Bank President Jean-Claude Trichet said today investors are underestimating the determination of policy makers to shore up the euro. Poland’s manufacturing industry grew for a fourth month in November as new orders expanded the fastest since May 2004, HSBC Holdings Plc said.

“The fundamental data have been just great and we see that the economy is growing so that should support the zloty,” Marcin Kopaczynski, an analyst at Raiffeisen Zentralbank Oesterreich AG, said by phone from Vienna. “We still have a chance to jump on that train and towards 3.95 per euro.”

The purchasing managers’ index for Poland advanced to 55.9 in November from 55.6 in October, the third-highest reading the survey’s history, HSBC said. A government report yesterday showed the economy expanded at the fastest annual pace in two years.

The zloty slumped to the lowest level in more than four months this week as investors shunned emerging-market assets amid speculation Europe’s debt crisis will worsen.

Finance Ministry

Poland is continuing to “take advantage” of a weaker zloty to exchange part of about 5.6 billion euros ($7.3 billion) held by the Finance Ministry, Piotr Marczak, head of the ministry’s public debt department, said on Nov. 29. He declined to say whether the ministry conducted any transactions on the currency markets recently.

“More and more investors are focusing on the year-end outlook of the zloty following the hints from the finance ministry that they can” shore up the currency, Gyula Toth, an emerging-market strategist at UniCredit SpA in Vienna, wrote in a note to clients. “With euro-zloty right in the middle of the 3.80-4.20 range we would not jump on the recovery trade but continue to monitor the market closely with a constructive bias.”

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